While businesses are already required to issue 1099's for services, they generally are not required to issue them to corporations, and they are not required to issue them for the purchase of tangible goods. The new law will require businesses to issue a 1099 whenever they purchase more than $600 of any good or service. SMC Business Councils, a Pennsylvania business group argued against the provision while it was still in committee last October. Based on a survey of their membership, SMC said that the number of 1099s filed would increase by a factor of 20 to 40, and it takes about 30 minutes to process each one. The companies responding to their survey had between one and 175 employees. The average number of 1099s they issued was 10. Based on their survey results, the average number of 1099's would go from 10 to 300, and it would take approximately 150 hours, almost four weeks to process them!Their October 28, 2009 press release included some statements about the likely effect of the new rule.
Robert Schmitt, CFO of BNI of Western Pennsylvania, commented, "I spend about half a day right now generating the fifteen 1099's I currently do. Between checking for accuracy, and updating address information, the end result will be taking blocks of time away from my staff."There is already a movement to change the rule. Representative Dan Lungren (R-Calif.) introduced legislation (H.R. 5141) repealing the requirement.
Glen Maus, president of Magee Plastics, believes, "this is another undue burden on small business, in an effort to assist a government unable to effectively do its job to provide revenue."
Mark Knobil, owner of Mark Knobil FILM/TAPE, is self-employed and said, "I do not have an accounting department. I have a laptop and a copy of Quicken. I am already drowning in paperwork."
C. T. Forster, vice president, Beaver Valley Alloy Foundry, voiced the prevailing opinion saying, "This additional time and bookkeeping would be a huge burden on our office. We will also have to send our tax information to all of our customers."
Chuck Wozniak, president, Creekside Springs, LLC, opined, "Pretty soon we will need a part-time person just to handle federal and state reporting requirements. I guess this is their idea of job creation; but it adds no real value to the economy. It only saps profitability from small businesses," he said.
For more details on this, see my post on Help with taxes.
No comments:
Post a Comment